If you’re within 10 years of retirement — or already there — you’ve likely been keeping a close eye on the economy. The market’s recent volatility, sparked by President Trump’s announcement of sweeping tariffs, may feel like déjà vu from a few years back. But this time, the stakes could be even higher, especially if you’re relying on your nest egg to carry you through the next few decades.

What are tariffs, and why do they matter?

At their core, tariffs are taxes on imported goods. While they can be used as a negotiation tool to level the playing field with countries that impose higher taxes on American exports, the downside is that tariffs raise the prices of goods we import. That can cause inflation, especially when tariffs are implemented broadly or unpredictably, as seen in Trump’s past and potential future policies.

If the cost of goods goes up, your dollar doesn’t stretch as far. And if you’re on a fixed income in retirement, that can quickly lead to a budget squeeze.

Could tariffs push us into a recession?

The real worry isn’t just inflation. The bigger issue is how businesses react to tariffs. When costs rise, companies may slash budgets, delay hiring, or even cut jobs. And that’s exactly what we’re seeing signs of.

Corporate earnings reports are about to roll out, and many CEOs are already dialing back their forecasts. Some aren’t even issuing guidance, a sign that uncertainty is ruling the day. That pause in corporate spending, if widespread enough, could tip the economy into a recession — or confirm we’re already in one.

But wait, unemployment is still low. Are we really in a recession?

Technically, no. The job market remains strong, which has kept the Federal Reserve from cutting interest rates. But here’s the catch: if earnings reports reveal widespread belt-tightening across corporate America, layoffs could follow. If that happens, unemployment could spike—and that’s when things get more serious.

As David J. Scranton, founder and CEO of Sound Income Group noted in a recent episode of The Retirement Income Source radio show, “Corporate America already has its budget for 2025…but when business plans get thrown out the window, that means money not going into the economy—and that causes a slowdown.”

What does this mean if you’re nearing retirement?

If you’re still fully invested in growth-focused strategies, you might be feeling uneasy —
and with good reason. A major market correction could shrink your portfolio just when you need it most. But the good news? There’s still time to act.

One approach that’s gaining attention is the Income First strategy. Unlike the traditional 4% withdrawal rule, which requires you to sell off assets to generate retirement income, this model emphasizes interest and dividends from individual securities like bonds, preferred stocks, and other income-producing investments.

This strategy creates more predictability, especially in uncertain economic environments. If tariffs push us into a recession, income-focused investors may weather the storm far better than those relying on stock appreciation.

So, should you make a move?

That depends. If you’ve already transitioned to an income-first approach, stay the course. Your portfolio may fluctuate in value, but the income it generates should remain relatively stable.

If you haven’t yet made the switch, now might be the time. As Scranton points out, “If you can afford, at today’s values, to make that transition…then I encourage you to accelerate that transition and do it now.”

The S&P 500 could drop another 20% if a recession hits hard. But if you act now, you might lock in income from your current portfolio value — and reduce the stress that market uncertainty can bring.

Bottom line: Don’t let politics derail your retirement

Whether or not President Trump’s tariffs are a negotiation tactic or a long-term policy, the reality is that markets don’t like uncertainty. As someone who is approaching or in retirement, you don’t need to ride the rollercoaster anymore.

It’s time to prioritize income, reduce risk, and plan for stability — so you can enjoy retirement the way you deserve.